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Oil Gains as Goldman Projects Prices to Rise; Gold Up on Bargain-Hunting

Oil is up slightly in early morning trade, lifted in part by a Goldman Sachs report finding current crude prices too cheap. Investors will be eyeing the release of the latest U.S. crude inventories data, as the American Petroleum Institute will be releasing its weekly numbers later in the day. Analysts broadly expect stockpiles to have declined as Tropical Storm Bonnie disrupted production in the Gulf of Mexico.

Gold is on the rise as bargain-hunters swooped in to take advantage of the yellow metal's decline. The London Metal Exchange reported trading in the first half of the year reaching record levels, with total trading reaching 59.3 million contracts, up 8% from the same period a year ago. The LME will create a global steel contract Wednesday through the merger of its Far East and Mediterranean steel billet futures contracts.

At 0755 ET, Brent crude is up 0.4% at $77.79 a barrel, while light sweet crude is up 0.4% at $79.26 a barrel, and natural gas is up 0.9% at $4.65 a million British thermal units.

Gold is up 0.1% at $1,184.00 an ounce, while silver is up 0.2% at $18.23 an ounce, and copper is up 0.3% at $3.23 a pound.

Goldman reported that crude prices are too low at current levels, given the rebound in U.S. equity prices in particular, and the investment bank expects the balance between supply and demand to tighten in the latter part of this year.

As for BP plc ( BP ), it is up nearly 5% in pre-market trade on the NYSE, even though the oil giant reported a record net loss of $17.2 billion in the second quarter, compared to a $4.39 billion profit during the same period a year ago. The company also announced Monday that Robert Dudley will replace Tony Hayward as CEO on Oct. 1, as the British group continues to struggle with the clean-up and costs due to the Gulf of Mexico spill.

Mining group African Barrick Gold ( ABG ) cut back its production guidance for the fiscal year due to delays in accessing higher grade from its Buzwagi mine in Tanzania. The company expects to produce 750,000 ounces to 800,000 ounces of gold this fiscal year at a cash cost of $500 to $550 an ounce. Previously, the company had projected production of 800,000 to 850,000 ounces.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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